Japan calls Intel to task over anti-AMD rebates

What's it got to do with you anyway, Intel says

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Intel is facing demands that it changes the way it does business in Japan or face court action.

Japan's Fair Trade Commission (JFTC) has ruled that the company deliberately tried to limit AMD's market share, by imposing restrictions on five of Japan's biggest PC makers, which collectively account for 77 per cent of PC sales in the country.

We have a summary of the JFTC's findings, courtesy of an AMD press release, namely that:

One manufacturer was forced to agree to buy 100% of its CPUs from Intel; another manufacturer was forced to curtail its non-Intel purchases to 10% or less;

Intel separately conditioned rebates on the exclusive use of Intel CPUs throughout an entire series of computers sold under a single brand name in order to exclude AMD CPUs from distribution;

The mechanisms used to achieve these ends included rebates and marketing practices that includes the "Intel Inside" program and market development funds provided through Intel's corporate parent in the United States.

The JFTC has told Intel that it can no longer dole out rebates to Japanese PC makers on conditions that exclude competitors. Intel has ten days to respond to the JFTC, but says it continues to believe its practices are legal. It is deciding what action to take.

In a statement Intel expressed concern that Japanese regulator's decision "does not appear to take into account antitrust principles commonly accepted worldwide".

Bruce Sewell, vice president and general counsel for Intel, said: "One of the core principles of competition policy is the notion that such policies should be based on sound economics. There is a broad consensus that competition regulators should only intervene where there is evidence of harm to consumers. It is apparent the JFTC's Recommendation did not sufficiently weigh these important principles."

AMD has a different take on the ruling:

"The JFTC found that Intel illegally manipulated the market to exclude competition, hurting PC users around the world," said Thomas McCoy, AMD executive vice president. "Using market power illegally to limit innovation and, more importantly, consumers' freedom to choose, cannot be tolerated. We encourage governments around the globe to ensure that their markets are not being harmed as well.

"The evidence of harm to consumers is obvious. By preventing PC manufacturers from using CPUs of their choice, Intel's misconduct deprived consumers worldwide of the freedom to purchase computers that best fit their needs. Efforts by an avowed monopolist to artificially set market shares to exclude competition clearly violates antitrust standards globally."

In July last year the JFTC took similar action against Microsoft, calling for changes to contracts it makes with PC manufacturers.

European regulators are also looking at Intel, following complaints from AMD. ®